Real, MTV & Verizon join forces to take on Apple's iTunes

After failing to compete against Apple’s iTunes, MTV Networks and RealNetworks have now joined the forces to take on the universal online music store. The two companies have planned a digital music joint venture to keep pace with Apple’s iTunes Music Store.

MTV Networks, a division of media conglomerate Viacom, and RealNetworks, a creator of digital media services and software, on Tuesday announced that they have formed a digital music joint venture by merging their online music offerings services, Urge music store and Rhapsody download service respectively.

Urge is a paid-subscription music and video download service which was launched by MTV Networks in May 2006 in partnership with Microsoft. Launched in December 2001, Rhapsody is a subscription-based online music service from RealNetworks that gives users unlimited access to a vast library of major and independent label music. Rhapsody was the first music service to offer streaming on-demand access to nearly its entire library of digital music.

The two companies believe their newly created service, which will be run by a new company, Rhapsody America, would pose a strong challenge to Apple's much-touted iPhone and iPod player. Consumers can access the new service via their PC, portable music device or mobile phone.

Real and MTV have also signed an exclusive, long-term agreement with Verizon Wireless, a joint venture of Verizon Communications and Vodafone. Under the deal, Verizon Wireless will act as mobile distribution partner for the joint venture formed between Real and MTV Networks and its V Cast Music service will convert into the mobile platform for the integrated Rhapsody service.

Rhapsody America, a single, integrated online and mobile music platform, will be headed by Urge general manager Michael Bloom and majority-owned by RealNetworks. The company will have offices in New York, Seattle and San Francisco.

"Today, we're really excited to announce that MTV Networks, RealNetworks, and Verizon Wireless are getting together to announce a new, integrated digital music experience that consumers can access through their PCs, portable music devices, and mobile phones," said Van Toffler, president of MTV Networks’ music & logo group.

"The new service combines the musical curating and programming of MTV Networks' critically-acclaimed Urge service with the best of Real's market-leading Rhapsody service."

Real and MTV have declined to give details about the launch of new service. However, they have made the existing Rhapsody service fully available to Urge users, while Rhapsody subscribers can enjoy a few Urge features.

"We've launched some Urge-specific, sort-of-MTV-Network-brand-specific content for Rhapsody subscribers," said Real spokeswoman Rhonda Scott. "Today, we launched some content related to the upcoming Video Music Awards, and that's just the start of it."

Real, MTV and Verizon have brought Rhapsody, Urge and V Cast into a single platform to kill Apple's enormously successful iTunes online music service.

Apple's iTunes store was introduced in 2003 for commercial music downloads and it became instantly popular with online customers. Apple had started with a library of only 200,000 songs and today it has 3.5 million songs in his pocket.

The world's most popular online movie store carries over 400 movies, more than 4 million songs and 350 TV shows that can be downloaded and played on Apple's revolutionary iPod digital media players.

Movies purchased and downloaded from the iTunes Store can be viewed on a computer, fifth generation iPod and, soon on Apple TV. Most of them are priced at US$9.99 each. Movies downloaded from the iTunes Store are downloaded in near-DVD quality at a resolution of 640x480.

Shares of Real jumped 7.7%, or 45 cents, to $6.30 on Tuesday, while shares of Viacom surged 0.4%, or 14 cents, to $37.70 and Verizon increased 1.5%, or 60 cents, to $41.71.